Child Health and Household Resources: Evidence from the South African OldAge Pension Program

1
Child Health and Household Resources Evidence
from the South African Old-Age Pension Program

• Duflo, Esther (2000),
• American Economic Review
• Papers and Proceedings,
• 90(2), pp. 393-398

2
Motivation

• Evidence
• Childhood nutrition (incl. in utero) affects
  long-term development.
• In US, monetary transfers to the poor showed to
  have very little impact on child welfare.
• Argument
• Parental income and monetary transfers are more
  likely to be of greater magnitude among poor
  households in developing countries.

3
Stylized Facts

• Pension Expansion
• Pension introduced for whites in 1920s, during
  apartheid era it was racially discriminatory.
• Different means test for each race group.
• Benefits much bigger for whites than for
  Africans.
• Distribution of whites pensions made through
  post offices, while Africans were distributed
  through mobile pay points that didnt go very far
  into rural areas.
• At the end of apartheid era, the govt. was
  committed to achieving parity of eligibility
  requirements and benefits between whites and
  Africans.
• Done so by increasing benefits received by
  Africans.

4
Stylized Facts

• Rapid increase in coverage and benefits of the
  Old Age Pension program in South Africa in early
  1990s.
• In 1993, 80 of African women gt60 and 77 of
  African men gt65 received the pension.
• The max benefit of 370 rands was equal to half of
  the minimum wage.
• And twice the median income per capita in rural
  areas.
• Close to 1/3 of African children lt5 live with a
  pension recipient.

5
Stylized Facts

• Children who live with a pension recipient
• Tend to come from relatively disadvantaged
  backgrounds.
• Tend to be smaller than other children their
  age.
• Height reflects accumulated investments in child
  nutrition.

6
Steckel, Richard H. "Stature and the Standard of
Living." Journal of Economic Literature, 1995,
33(4), pp. 1903-40.
7
Motivation

• What are we concerned with?
• Did this increase in household resources,
  improve child health and nutrition?
• Does Gender of recipient matter?

8
Summary of Paper

• Presents nonparametric evidence on the effects
  of the expansion of the old age pension program
  in South Africa.
• Uses age-eligibility instead of pension take-up
  conditional on age-eligibility.
• Compares the differences in height between
  children in eligible and non-eligible households
  AND between children exposed to the program for a
  fraction of their lives and children exposed all
  of their lives.

9
Related Literature

• Duflo, Esther. Grandmothers and Granddaughters
  Old-age pensions and Intrahousehold Allocation in
  South Africa. The World Bank Economic Review
  2003 17, 1 ABI/INFORM Global, pg. 1
• Donato, K. M. Malia, S. Thompson-Colón, T.
  Stainback, M. Counting on Kin Social Networks,
  Social Support, and Child Health Status. Social
  Forces 833, March 2005
• Shea, John. Does parents money matter? Journal
  of Public Economics 77 (2000) 155184
• Burgard, Sarah. Does race matter? Childrenss
  height in Brazil and South Africa. Demography,
  Volume 39-4, November 2002
• Rosenzweig, Mark R. and Wolpin, Kenneth I.
  Heterogeneity, Intrafamily Distribution, and
  Child Health The Journal of Human Resources,
  Vol. 23, No. 4 (Autumn, 1988), pp. 437-461

10
Related Literature

• Zere, Eyob and McIntyre, Diane Inequities in
  under-five child malnutrition in South Africa
  International Journal for Equity in Health, 2003,
  27
• Thomas, Duncan. Intra-Household Resource
  Allocation An Inferential Approach The Journal
  of Human Resources, Vol. 25, No. 4 (Autumn,
  1990), pp. 635-664
• ------------- Like Father, like Son Like
  Mother, like Daughter Parental Resources and
  Child Height The Journal of Human Resources,
  Vol. 29, No. 4, Special Issue The Family and
  Intergenerational Relations (Autumn, 1994), pp.
  950-988
• Ranchhod, Vimal. The Effect of the South African
  Old Age Pension on Labour Supply of the Elderly
  South African Journal of Economics Vol. 744
  December 2006

11
Theory

• With the above mentioned assumptions,
• One expects to find favorable differences between
  children who benefit from the program all of
  their lives and those who benefit for only a
  portion of their lives.
• Height-for-age still reflects past deprivations
  or illnesses.
• Results
• Children born before Jan 1992 smaller in
  households with an eligible member than in other
  households.
• Girls born after Jan 1992 are taller if they live
  with an eligible woman.

12
Empirics

• Data from the national survey of South Africa.
• Carried out jointly by the World Bank and the
  South African Labor and Development Research Unit
  at Uni. of Cape Town.
• During last 5 mths of 1993, 9000 households (all
  races and areas) interviewed.
• Measurement (height weight) for all children gt7
  were taken.
• Sample restricted then to children between 6-60
  months. (following WHO norms)

13
Empirics

• Height-for-age Z scores constructed.
• Subtract median among children same age and sex
  in NCHS reference pop.
• Ref. pop. group of well nourished American
  children.
• Then divide by the SE in age and sex group in
  ref. pop.
• While fully controlling for age effects.

14
Empirics
15
Empirics

• Constructs estimate equations for child-health
  production functions.
• Where hi is height-for-age of the child and di is
  the date of birth of the child and ei is an error
  term

16
Empirics
17
Empirics
18
Empirics

• Summarizing these patterns
• Calculate estimates of the avg. derivative
• By obtaining estimates for gE(d) and gN(d) by
  running a cubic-spline regression of
  height-for-age on DOB (in mths)
• Then calculate the analytical expressions for the
  estimated function
• Then use the analytical expression to obtain
  average derivative over the chosen range.
• The avg. monthly rate at which the diff between
  the two curves changes

19
Empirics
20
Conclusion

• Expansion of Pension program has led to an
  improvement in the health and nutrition of
  children.
• Almost entirely due to pensions received by
  women.
• So, exogenous increases in income can improve
  child health in developing countries.
• Dependent on whether if in hands of men or women.
• Money given to grandparents can reach young
  children.

21
Policy Implications

• If the program were not naturally biased in
  favor of women, it would not improve child health
  as much